Ways To Boost Your Business Development In 2008

Trends Report

What’s Hot and What’s Not in the Legal Profession

It’s back! The annual look at the trends that will shape practice management and marketing in coming months and years.

All The Right Moves

As we flip the calendar to the new year, Bob Denney annually shares with us his firm’s report on what’s sizzling and what’s fizzling in the legal services market. From white-collar crime in the States to the white-circle firms of Britain, here is what to watch today, tomorrow and beyond. — The Editors

This is our 19th annual report on what’s going on in the legal profession in the United States as well as in other parts of the world. As always, it is based on information we compile throughout the year from many sources. Some of the findings are obvious. Others are not. Nevertheless, this is the picture at the beginning of 2008. — Bob Denney

Practice Areas

Hot

Intellectual Property. Not only patents but also copyrights, owing to Internet issues. Proposed legislation may provide copyright protection against knockoffs of high-fashion designs, too, because the devil does not always wear Prada. Also the PTO has adopted new rules.

Immigration. So hot that a few firms are separating it from labor and employment.

Labor and Employment. More complex than ever, not just owing to immigration, but also because of new EEOC rulings, continuing discrimination claims and possible new organization drives by unions.

Corporate Investigations. Fastest growing area of white-collar crime.

Complex Litigation. But see “Getting Hot—Mediation.”

Global Warming. California firms were the first to form this environmental subgroup that includes regulatory and insurance issues. Now Greenberg Traurig (which has offices and alliances around the world) has done so.

Domestic Relations/Family Law. Determination of parentage is now a hot issue in fertility law as the result of in vitro fertilization and embryo storage.

Pro Bono. Not only as a payback to the community, but also as a recruiting attraction and a professional development strategy to provide courtroom experience for associates.

Estate Planning and Administration. Particularly the latter, now that the baby boomers are starting to retire.

Elder Law. As part of the estates practice, mostly in smaller firms.

Animal Law. A niche that was heating up before the Michael Vick case and the Animal Fighting Prohibition Enforcement Act was signed last May. There are anticruelty laws in 43 states.

Getting Hot

Mediation. As well as other forms of alternative dispute resolution.

Libel. Suits against bloggers and message board postings are still increasing.

Foreclosures. Small firms overcome the low rates with staff-to-lawyer ratios as high as 10:1.

Art Theft and Fraud. A small but growing number of lawyers in the U.S. and Europe are focusing on the recovery of stolen art and historical pieces.

Bankruptcy. The cycle is swinging back. May be hot again by spring.

Insurance Coverage. Owing to global warming. Area was cool a year ago.

Post-arbitration Litigation. Some experts are seeing an increase.

Cooling Off

Structured Finance/Securitization. Largely owing to subprime mortgages. But a few firms, including Patterson Belknap, have started subprime counseling practices to help clients deal with problem loans.

Mergers and Acquisitions. Deals are being cancelled or at least deferred.

Cold

Medical Malpractice. Filings continue to decline owing to tort reform in many states, while the percentage of verdicts in favor of health-care professionals has increased in some parts of the country. As a result, insurance defense practices are shrinking and some firms have dissolved.

Workers’ Compensation. Here, too, the number of cases being filed continues to decline.

Geographic Market

Phoenix. Firms from the Upper Midwest and more recently the East continue to expand with offices here because it is the logical market in the booming Southwest. Ballard Spahr Andrews & Ingersoll is the latest.

China. Still hot despite a shortage of legal talent and regulations that limit the work foreign lawyers may do. McDermott Will & Emery may have found a way around these hurdles by the strategic alliance it entered into a year ago with Yuan Da Law Offices of Shanghai—reported to be the first formal arrangement between a Western and a mainland China firm.

United Arab Emirates. Dubai is white hot. Patton Boggs and Gibson, Dunn & Crutcher are opening offices there, following other firms that opened there in the past few years.

Spain. Has continued to be strong for U.S. firms.

Marketing and Business Development

CRM. As we reported a year ago, firms continue to struggle with business development activity reporting.

Marketing Technology. Jeanne Hammerstrom, CMO at Benesch Friedlander, has hired a marketing technology specialist to drive the CRM and competitive and marketing intelligence systems, as well as to work with recruiting and IT on project and practice management for practice groups.

Television Advertising. While still frowned upon by most of the legal profession, it continues to be the medium of choice for personal injury firms and others in the consumer legal market. (Radio is second.) Now LexisNexis Martindale-Hubbell is partnering with Spot Runner, an Internet-based advertising agency, to create ads specifically for smaller M-H clients. Ads developed to date cover areas such as family law, drunken driving, personal injury and general practice. Commercials for criminal and immigration are being developed.

Print Advertising. Continues to be a medium of choice for large firms. Some have shifted their strategy from an institutional approach (i.e., the firm itself) to featuring practice areas. Cozen O’Connor and Winthrop & Weinstine were among the first. Now Benesch Friedlander (there’s that firm again) has launched an interesting campaign, “My Benesch, My Team.”

Advertising and Solicitation. The distinction is specifically addressed within the rules in some states. However, as ABA counsel Will Hornsby has written, “The ABA Model Rules and the states that base their regulations on those rules do not set out the distinction clearly. The difference is important, however….” Therefore, marketers and lawyers must be certain of the rules in their states. This gets even more complicated for firms with offices in more than one state.

Martindale-Hubbell. A new surge of challenges from firms questioning the cost of listing in M-H.

Marketing Budgets. Continue to increase as a percentage of firm revenues at both large and midsize firms, with many now going beyond the historic 2 percent. In the U.K., marketing budgets have always been much larger, running as high as 10 percent in some “white circle” firms. In the U.S. and the U.K., the big accounting firms have been spending that much for years.

Marketing Department Staffs. Increasing in size along with the budgets.

Role of the Marketing Professional. Appears to be changing in several different directions. Some firms have recognized that their chief marketing officers’ role should be strategic. However, as their departments have grown, a high percentage of CMOs are having to spend more time on department administration and staff management. And some firms now expect their CMOs to produce new business—i.e., concentrate on sales and business development.

Marketing vs. Business Development. Many firms have not yet realized that these are separate but symbiotic functions. As we stated in last year’s report, corporations long ago recognized this and have combined marketing and sales under one senior executive so that the functions supplement and complement each other. This is another area where law firms should learn from their clients.

Directories and Listings. As subscribers to the LMA’s list serve know, marketers are being deluged with queries from their lawyers about “Best Lawyers” lists, as well as solicitations from publishers promoting them. Since there are reportedly over 700 directories and listings, marketers must determine which are worthwhile. There are now at least two sources to help: The RankingsForLawyers blog posts marketing professionals’ opinions on lists and Jaffe Associates has produced a Rankings and Publications Report, available on its Web site.

NOTE: Discussions of additional developments, as well as more detail on some of the issues reported here, are posted in the Writings and Legal Communiques sections at Robert Denney's website.

To receive copies of the “What’s Hot and What’s Not” report, including periodic updates, contact Robert Denney Associates.

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HOT Law Practice Trends and Issues

INTELLECTUAL PROPERTY FIRMS. The conventional wisdom has been that these firms could not survive on their own, and indeed some have merged into large, full-service firms. But IP boutiques continue to not just survive but thrive. One indication of this is the movement of IP lawyers and staff from large, general firms back to IP firms.

NEW ANCILLARY BUSINESS. Last spring Duane Morris received approval from the Pennsylvania Department of Banking to start a trust company to handle international financial planning for high-net-worth émigrés to the U.S.

APPELLATE CASE CONSULTING. Schnader Harrison Segal & Lewis also formed a new ancillary business, the Bernard G. Segal Institute for Appellate Advocacy. It provides advice to lawyers outside the firm in preparing oral arguments. There are plans to also provide advice on writing briefs.

RECRUITING. The size of the classes at most law schools has remained flat. As a result, the largest and most elite firms are increasing the number of schools at which they recruit, including some lower-rated ones. However, many other firms are not hiring as many associates because of the recent huge increases in starting salaries.

RATE INCREASES. Corporations are increasingly fed up with firms’ rate increases (excluding the $1,000-per-hour lawyers whom they consider worth it). This, along with poor service, is why many are replacing nearly two-thirds of their primary law firms.

MIDSIZE FIRMS. The conventional wisdom is wrong again. Well-managed midsize firms—and even some small ones—are not only surviving but are thriving by attracting clients faced with the high rates and often poor service of the large firms.

FLEXIBLE PARTNERSHIP TRACKS. Some firms are eliminating their traditional lock-step partnership track. In these firms “high-performing” associates are considered after a lesser number of years while the track is extended for others who develop at a slower pace. Although still rare, a few firms are promoting to partnership associates who work reduced or flex-time schedules. Weil, Gotshal & Manges has created the position of “flex-time partner.”

MENTORING. A tradition that is making a comeback in many firms because it is one of the most effective ways to pass on knowledge to younger lawyers.

LEADERSHIP TRAINING. Faced with continued high attrition as well as a generation gap, more firms are recognizing they need to not only retain their associates and younger partners, but also develop them into well-rounded, business-savvy lawyers. As a result, they are providing more management and leadership training.

POST-MERGER INTEGRATION. As a result of the continuing wave of mergers and lateral entries, firms are placing more emphasis on integrating these new lawyers to reduce subsequent fallout.

OFFICE DESIGN. Lawyers’ offices are shrinking and so are libraries. Some firms, such as Pillsbury Winthrop Shaw Pittman, now have “break rooms” as gathering places. Others have flex space. Vinson & Elkins’s Houston office has its own Starbucks.

WORK-LIFE ISSUES. Women now account for 60 percent of the new entrants into U.K. law firms and 18 percent of them are from minority ethnic groups. As a result, these firms are following the example of U.S. firms by focusing on the challenges faced by working parents.

OFFSHORING. Corporate legal departments and many large firms have been outsourcing routine support services but mostly within the U.S. Two years ago Acccenture, the global management consulting firm, began sending some routine legal work to Mauritius. That marked the start of a trend for legal departments and law firms to offshore some of their commodity legal work to locations such as India and the Philippines.

VIRTUAL ASSISTANTS. Another form of outsourcing that is new. VAs are paralegals and administrative specialists who work off site and online to handle legal projects.

Partner Buy-in. According to IOMA’s Law Office Management & Administration Report for 2007, only 65 percent of the firms surveyed require new partners to buy into their firms, compared to 85 percent two years ago. Not a healthy trend, since it tends to foster an “employee mentality” among partners.

CALLS FOR KILLING THE BILLABLE HOUR. They’re back again, including in highly publicized recent articles by Scott Turow and Herb Denenberg (former Pennsylvania insurance commissioner). However, critics either fail to come up with a solution or ignore alternatives that already exist.

DE-EQUITIZATION. It’s becoming a buzzword as large firms fire or demote partners to boost net income per partner and to keep or attract big producers.

NONLAWYER BIOS ON WEB SITES. A handful of mostly smaller firms have been posting photos and bios of their administrative and staff personnel on their Web sites for some time. One midsize firm that recently did so is Wendel, Rosen, Black & Dean.

STAFF ON COMMITTEES. Many firms have committees comprised of only staff. Now some firms are including staff with lawyers on committees such as technology, marketing and strategic planning. The results are improved staff retention and morale along with new and worthwhile ideas, plus improved implementation of plans.

DO-IT-YOURSELF TORT REFORM. Launched in 2002, Medical Justice is a membership-based organization designed to complement tort reform and head off frivolous lawsuits. After five years the company, which is top-heavy with physicians in high-risk practices, reports that its members are sued at a rate of under 2 percent a year versus the rate for the average doctor of 8 to 12 percent.

MANDATORY RETIREMENT. The $27.5 million settlement in the Sidley Austin age discrimination case, combined with recently adopted policies by some trade associations, may cause firms to rethink their mandatory retirement policies.

FIRM MANAGEMENT. The trend of having managing partners designated as CEOs continues to grow, and not just in large firms. Some firms with as few as 100 lawyers now have full-time CEOs. Why? They have recognized that the practice of law is a profession but a law firm is a business.